Seeking Alpha

aarc's  Instablog

aarc
Send Message
  • So Goes The First 5 Trading Days 0 comments
    Jan 14, 2014 1:32 PM

    There is a statistical study that if the first 5 trading days of a new year goes up highest probability is that the whole year will also become an up year. SnP500 was down during the first 5 trading days of January 2014.

    ----------------

    Technically speaking: Once a wide-range-bar (W-R-B) rally bar happens highest probability is that the WRB will not be retraced by more than 61.8% if a correction happens and in majority of cases will be retraced by only +/- 38% if a pullback (or correction) happens. In some cases the first WRB got followed by another WRB. In many cases of two consecutive WRBs they actually become three (3) consecutive WRBs called the Three White Knights in Japanese Candlestick Analysis:

    >> SnP500 Annual Chart: http://g15.picoodle.com/ltd/img15/5/1/6/aarc/f_e0r5_b48_ubk5c.gif

    >> SnP500 Monthly Chart: http://g15.picoodle.com/ltd/img15/5/1/6/aarc/f_141u_442_ubk5c.png

    SnP500 was a wide-range-bar last year and still plowing upwards with encouraging momentum build up on the monthly chart. Thus, highest probability it will be followed by more rallies whether or not a pullback or correction happens for the short-term to medium-term within this year.

    --------------------

    Our Medium-Term Analysis remains in a quagmire not giving us any indication the Process of Elimination, as envisioned last May 2013, will finally be able to achieve it's objective of limiting the possible 4 scenarios to only one (1) highest probability scenario:

    >> SnP500 Conservative Scenario: http://img15.imagefra.me/i51e/aarc/141u_48d_ubk5c.png

    >> Dow Jones Aggressive Scenario: http://img15.imagefra.me/i51e/aarc/141u_73c_ubk5c.png

    >> Russell2000 Super-Duper Scenario: http://img15.imagefra.me/i51e/aarc/141u_24a_ubk5c.png

    SnP500 is now at it's upper limit but that doesn't mean an over-extended 5-th wave does not happen. It happened many times before but compared to the numerous extended 5-ths the probability of over-extended 5ths pales in comparison.

    Dow Jones remains the easier to analyze on the weekly (and daily) charts with a nominal target of 16,776 for the 5th wave but can go toward the upper limit of 18,047 if it rallies well past 17,125 from yesterday's low - when viewed on the daily chart - for the v'-th wave.

    Russell2000 is, of course, the youngest and basically the most dynamic index for the US equity markets performing as if it is an Emerging Market with far higher upside targets (in percentage basis) than what SnP500 and/or Dow Jones can possibly achieve.

    Compq is an outlier using a possible complex running correction per indicated on the last published chart. This is an extremely complex process (or analysis) not suitable for practically almost all SA audience thus I decided to not continue the Compq EWA to reduce the clatter. Running Corrections are rare cases thus it should be considered as the lowest probability scenario in the first place.

    ---------------

    Short term I still prefer publishing SnP500 EWA + TA since it is the most widely analyzed (and traded) major index in the world:

    >> SnP500 Daily: http://g10.picoodle.com/ltd/img10/5/1/14/aarc/f_141u_078_ubk5c.png

    >> SnP500 Intraday: http://g10.picoodle.com/ltd/img10/5/1/14/aarc/f_141u_4fe_ubk5c.png

    Again, SnP500 is a typical Bull Flag on the intraday with the most common occurrence vertical c-wave down.

    =============

    Trading Strategies:

    For the short-term basis: This is just another typical or SOP buy the Bull Flag on recovery after a false breakdown below the lower trendline support. Or buy above today's high if a rally happens tomorrow for those who prefer to use the daily chart instead of the intraday chart - with yesterday's low as the hard stop loss.

    For the medium-term: I prefer to use the Dow Jones Aggressive Scenario since it has a distinguishable rallies and pullbacks on the weekly chart - unlike the SnP500 and Russell2000 with harder to analyze price actions and thus much harder to assign high-probability wavecounts.

    For the long-term: I was able to raise 8% cash early this year as SnP500 starts bumping against the upper limit of 1837. Objective remains to raise 10% cash as SnP500 struggles against multiple divergence sell signals on the weekly chart and as it traded within the major Fibonacci Extension Resistance Levels (usual Trend Reversal or Profit Taking Levels) of 1823 to 1923 on the monthly chart. See previous instablogs for chart illustrations of those levels.

    * I bought YM again early today as another Trend Trade, or Day-Trade to the upside, with 16,787 minimum; 16,939 nominal, and 17,125 maximum targets on the daily chart for the Dow Jones as a reference index.

    ** I was trying to write this Instablog early today (before the open) but the SA Instablog server was having problem(s). I decided to publish the short-term SnP500 EWA on my Comment at 9:38 am instead - for those who would prefer just-in-time analysis.

Back To aarc's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Most Commented
  1. The Acid Tests (3 Comments)
  2. Sticks And Stones Part III (3 Comments)
  3. Back to Sept 2008 (2 Comments)
  4. Global Outlook (2 Comments)
  5. To 5th or Not To 5th? (2 Comments)
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.